Govt may not need to buy cotton at MSP in 2016-17

13 Oct '16

2 min read

The Indian government may not need to intervene and buy cotton at minimum support price (MSP) in the current marketing season that began on October 1. It is because cotton prices are unlikely to fall below MSP in 2016-17 season. If it happens, this would be the first year since 2013-14 when the government did not have to intervene in market.

“Currently, market prices are above the MSP. When cotton crop floods to the market (in the coming weeks), there could be a decline in prices, but prices may still remain above the MSP. So it's expected that we may not have to go for MSP operations this year,” textiles secretary Rashmi Verma told a leading financial daily.

During the peak procurement season from December 2015 to May 2016, average monthly prices of Shanker 6 variety were 12-17.5 per cent higher than the MSP. Likewise, prices of bunny brahma variety were also higher by around 14 per cent during the same period, according to official data.

As a result of cotton prices hovering higher than MSP, government's 'Direct Payment Deficiency System (DPDS)' project may not take off this year as well, Verma said. Under the pilot project, the government had planned to transfer cash directly into farmers' accounts for any losses incurred by them due to a drop in the fibre prices from the MSPs. (RKS)

Fibre2Fashion News Desk – India

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